This paper critically reviews the World Bank's treatment analysis of the East Asian miracle. The Bank considers the Northeast Asian experience so extraordinary that other developing countries should not try to emulate Japan, South Korea and Taiwan, especially its industrial policy. Rather, the Bank claims that Southeast Asia achieved its miracle by liberalizing its economies from the mid-1980s.

Instead, this paper argues that the Bank's portrayal of Southeast Asia is misleading, that Southeast Asia's achievement is considerably more modest than Northeast Asia's, and that economic liberalization has often undermined the state capacities and capabilities necessary for developmental states.

The paper then goes on to critically review the evidence on the adverse consequences of economic liberalization in Sub Saharan Africa, very often due to conditionalities associated with structural adjustment programs of the World Bank and other international financial institutions. It argues that it will be crucial to enhance state capacities and capabilities for Sub Saharan Africa to achieve more rapid economic growth and development.